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As President Barack Obama takes his first trip to China, Beijing officials are in a triumphal mood, anticipating a "Chinese century" and looking forward to making the oblivious American leader the most important prop in their campaign to legitimize their central role in the world.

China's rulers, however, shouldn't need to seek affirmation. Their country is the planet's most populous state and sits in the center of the most dynamic region of the world. They are, at this moment, building sprawling cities with newfound wealth, making their gigantic military into a formidable fighting force, and buying resources from Africa to Australia. In short, China looks like the world's next hegemon.

But Chinese officials are not so sure of themselves. The nine men sitting on the Politburo Standing Committee oversee a one-party state riddled with corruption, held back by a discredited ideology, and undermined by decades of modernization. The country's export-dominated economic model is particularly ill-suited for the worldwide slump, and the Communist party's rigid political system is unable to respond to rapidly changing circumstances.

The failure to adjust will prove to be a problem because the Chinese people, over an especially prosperous decade, have become increasingly defiant, staging about 100,000 protests a year, some of them large and many violent. The leadership, not surprisingly, has become worried about what the laobaixing--the ordinary folk--will do if the country's economy enters a period of stagnation next year, as analysts increasingly fear.

More by Gordon G. Chang

Chinese leaders know that the stability of the modern Chinese state depends on prosperity and that prosperity largely rests on continued access to American technology and especially markets. Last year, all but $27.5 billion of China's $295.5 billion trade surplus related to sales to the United States. Fortunately for the party, Washington has continued to accept large trade deficits with China, and this unbalanced relationship gives Obama extraordinary leverage in his dealings with Beijing--but only if he uses it.

So far, he has mostly chosen not to do so. To his credit, Obama imposed Section 421 surge tariffs on Chinese tires in September, the Commerce Department levied anti-subsidy duties on steel products in late October, and his administration filed a World Trade Organization case against China in June, but he has failed to take concerted action in a period of Beijing's increasingly mercantilist behavior.

Obama's predecessor also failed to use America's enormous economic leverage on the Chinese, but George W. Bush did apply geopolitical pressure. First, changing course from the Clinton administration, he shored up relations with Tokyo. Obama, by contrast, has weakened ties with America's core ally in Asia.

Second, in what could turn out to be his most lasting legacy, Bush reached out to India and established strong working ties in vital areas, especially nuclear energy. His successor, unfortunately, has undermined these relationships. A partnership between the world's most populous democracy and its most powerful one--even if it remained informal--would be a setback of immense proportions for Beijing. To prevent such a threatening tie-up--and to avoid the formation of an "arc of freedom and prosperity" from India to Japan, as Tokyo once proposed--the Chinese would do almost anything, even accede to Washington's initiatives.

Obama's failure to consolidate relations with Japan and India, the countries China fears most, is a critical mistake. As a result, he has little to bargain with. Beijing's foreign policy is, above all, ruthlessly pragmatic. The Chinese generally do not reciprocate friendly gestures; they interpret them as weakness. Obama, who comes from the rough and tumble of Chicago's politics, should instantly recognize the way Chinese policymakers think. Inexplicably, he doesn't.

As a result of misunderstanding the Chinese, America is losing friends in Asia fast. Prime Minister Yukio Hatoyama, who ended the decades-long reign of the Liberal Democratic party in September, has signaled he wants to reorient Japan's foreign policy toward China. And some policy-makers in New Delhi, noticing Obama's unusually soft approach, are pushing their country away from America as they feel India too now needs to placate the Chinese. Washington, in a real sense, is undermining its own role in Asia.